TORONTO • After a cool-down during the past year in the fierce Canadian grocery wars, the food fight could be heating up again.

Overwaitea Food Group, a 145-store retail operator in British Columbia and Alberta owned by billionaire Jimmy Pattison, is pushing eastward into Saskatchewan and Manitoba with its Save-On-Foods banner.

The Langley, B.C.-based retailer will open 40 stores in the two provinces during the next three to five years, starting with seven stores in the spring of 2016 — three in Winnipeg as well as stores in Saskatchewan in Regina, Saskatoon, Yorkton and Moose Jaw.

“Our focus is mainly on building stores and putting stores in neighbourhoods where we can build stores to fit the neighbourhood — having a more focused approach in the communities where we plan to grow,” Darrell Jones, president of Overwaitea Food Group, said in an interview. “We think that is the advantage we have that makes us unique from our competitors.”

The privately held company prefers to chart the path of slow organic growth rather than sizing up through mass consolidations, Jones added.

But the move nevertheless raises questions about whether Metro Inc., the country’s third-largest grocery chain with outlets in Ontario and Quebec, will be interested in taking a run at extending its reach through an acquisition of Overwaitea.

Speculation about such a move ran high when Sobeys scooped up Canada Safeway in 2013 for $5.8-billion, and many guessed the Quebec-based grocer would try to scale-up by taking a run at Overwaitea — a 100-year old chain with estimated annual revenue of close to $3 billion that got its name from applying the baker’s dozen principle to tea. (Founder Robert Campbell Kidd became known for selling 18 ounces of tea for the price of 16 ounces, “overweight” tea).

Jones said revived speculation about a tie-up with Metro may be typical among industry watchers, but it is not a reality at this point.

“The folks at Metro are very good operators,” he said. “They do their thing and we do ours. I simply can’t see, right now, anything like that happening. They have a very successful business in Ontario and Quebec and we are doing our thing in the West and I think that is likely going to be the case for some time to come. Everybody is always speculating. But if you take a look at the track record of the Pattison Group, they are buyers, they are not really sellers.”

We are gradually working our way east, but we have no present plans to enter Ontario or Quebec

“Going into a new market increases the incremental amount of revenue without cannibalizing markets they are already in. If you can’t increase profit by growing your market, the only way to do it is by increasing your efficiencies. It is not a big deal (for Overwaitea) to move into Manitoba and Saskatchewan from Western Canada. It would be a much bigger deal to move into Ontario and Quebec.”

Jim Pattison, meanwhile, said the company is interested in cementing its gradual eastward expansion, but that does not include a push beyond Manitoba.

“We moved out of British Columbia and into Alberta about 20 years ago, and we are still expanding there,” the CEO of Jim Pattison Group, parent company of Overwaitea Food Group, said in an interview. “We are gradually working our way east, but we have no present plans to enter Ontario or Quebec.”

Save-On-Foods has at least 10 more stores opening in B.C. and Alberta over the next 18 months, the company added.

Handout/Overwaitea)

Save-On is Overwaitea’s biggest chain, with 80 grocery stores in B.C. and 30 in Alberta. The remaining stores include the banners Overwaitea, Urban Fare, PriceSmart and Cooper’s Foods.

Jones said Overwaitea may also look to bring its downtown grocery format, Urban Fare, to Manitoba and Saskatchewan if can find the right sites.

The company is keen to cater to the local communities where it opens stores, he added. On Thursday at one Winnipeg location, the retailer plans to take take consumer and community feedback for three hours on what the locals are looking for in a grocery store.

Jones also sees Save-On-Foods’ home delivery service, available on all Web orders for its new stores, as a competitive asset.

Canada’s largest grocers are trying to determine the best and most profitable Web strategy for perishable items. Walmart Canada launched an online pickup at its stores in Ottawa last week, and Loblaw has been piloting a similar program at three Toronto stores for the last few months.

Kevin Grier, an independent food industry analyst based in Guelph. Ont., said the latest news may in fact dampen any notion of an Overwaitea acquisition by Metro.

“Overwaitea was adamant at the time (after the Safeway deal) that they were not for sale,” Grier said.

“But everybody says they are not for sale until the right price comes up. The fact that Overwaitea is doing this does not make them more of a target, though — it could make them less of a target, in the short term. If I am a Metro, then why would I not wait out all of the capital costs of building and expanding?,” and the resulting increased competition in the West. “Ontario has been been the heart of the grocery battleground for years. Maybe the West is the new (competitive) battleground.”

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